FRIA (Definition of Terms)

Question 1

A debtor is unable to pay its liabilities as they fall due in the ordinary course of business or has liabilities that are greater than its assets.

Answer 1

Insolvency

Note: Banks, insurance companies and pre-need companies are not covered by FRIA.

Question 2

Refer to reasonable and necessary expenses:
a. Incurred or arising from the filing of a petition
b. Arising from, or in connection with, the conduct of the court proceedings, including those incurred for the rehabilitation or liquidation of the debtor
c. Incurred in the ordinary course of business of the debtor after the commencement date
d. For the payment of new obligations obtained after the commencement date to finance the rehabilitation of the debtor
e. Incurred for the fees of the rehabilitation receiver or liquidator and of the professionals engaged by them
f. Aithorized or mandated under FRIA or such other expenses as may be allowed by the Rules of Court

Answer 2

Administrative Expenses

Question 3

Anything of value that can be in the form of money, such as cash at bank or amounts owed; fixed assets such as property or equipment; or intangibles including intellectual property, the book value of which is shown in the last three audited financial statement immediately preceding the filing of the petition.

Answer 3

ASSET

In case the debtor is > than 3 years in operation, it is sufficient that the book value is based on the audited fs/s for the years or the year immediately preceding the iling of petition, as the case may be.

Question 4

All claims or demands of whatever nature or charter against a debtor or its property, whether for money or otherwise, liquidated or unliquidated, fixed or contingent, matured or unmatured, disputed or undisputed, including:
a. all claims of the government, whether national or local, including taxes, tarrifs and customs duties.
b. claims against directors and officers of the debtor arising from acts done in the discharge of their functions falling within the scope of their authority. The creditors or third parties can still file cases against the directors and officers acting in their personal capacities.

Answer 4

CLAIM

Question 5

The date on which the court issues the Commencement Order, which shall be retroactive to the date of filing of the petition for voluntary or involuntary proceedings.

Answer 5

Commencement Date

Question 6

Any natural or juridical person which has a claim against the debtor that arose on or before the commencement date.

Answer 6

Creditor

Question 7

The date on which the court issues the Liquidation Order

Answer 7

Date of Liquidation

Question 8

A sole proprietorship duly registered with Department of Trade and Industry (DTI), a partnership duly registered with the Securities and Exchange Commission (SEC), a corporation duly organized and existing under Philippine laws, or an individual debtor who has become insolvent.

Answer 8

Debtor

Exclusions: banks, insurance companies, pre-need companies, and national and local government or units.

Question 9

Real or personal property of the debtor upon which a lien attaches.

Answer 9

Encumbered Property

Question 10

A creditor whose claim or a portion thereof is neither secured, preferred nor subordinated under FRIA.

Answer 10

General Unsecured Creditor

Question 11

a. Corporations that are fiancially related to one another as parent corporations, subsidiaries or affiliates.
b. partnerships that are owned more than 50% by the same person.
c. Single proprietorships that are owned by the same person.

Answer 11

Group of Debtors

Question 12

Financial condition of a debtor that is generally unable to pay its liabilities as they fall due in the ordinary course of business or has liabilities that are greater than its or his assets.

Answer 12

Insolvency

Question 13

Monetary claims against the debtor, including stockholder’s advances that have been recorded in the debtor’s audited financial statements as advances for future subscriptions.

Answer 13

Liabilities

Question 14

A statutory contractual claim or juridical charge on real or personal property that legally entitles a creditor to resort to said property for payment of the claim or debt secured by such lien.

Answer 14

Lien

Question 15

Natural person or juridical entity appointed as such by the court and entrusted with such powers and duties as set forth in this Act.

Answer 15

Liquidator

Provided, that, if the liquidator is a juridical entity, it must designate a natural person who posseses all the qualifications and none of the disqualifications as its representative are solidarily liable for all obligations and responsibilities of the liquidator.

Question 16

The ownership interest of 3rd parties in property held by the debtor, including those covered by trust receipts or assignments or receivables.

Answer 16

Ownership Interest

Question 17

A lien on property, the possession of which has been transferred to a creditor or a representative or agent thereof.

Answer 17

Possessory Lien

Question 18

The restoration of the debtor to a condition of successful operation and solvency, if it is shown that its continuance of operation is economically feasible and its creditors can recover by way of the present value of payments projected in the plan, more if the debtor continues as a going concern than if it is immediately liquidated.

Answer 18

Rehabilitation

Question 19

Any claim whose payment or fulfillment is secured by contract or by law.

Answer 19

Secured Claim

Question 19

A plan by which the financial well-being and viability of an insolvent debtor can be restored using various means including, but not limited to, debt forgiveness, debt rescheduling, reorganization or quasi-reorganization, dacion en pago, debt-equity conversion and sale of the business (or parts of it) as a going concern, or setting-up of new business entity or other similar arrangements as may be approved by the court or creditors.

Answer 19

Rehabilitation Plan

Question 20

A holder of shares of a corporation or a member of a nonstock corporation or association or a partner in a partnership.

Answer 20

Stakeholder

Question 21

Any claim other than a secured claim.

Answer 21

Unsecured claim

Question 22

A creditor that is a member of a class of creditors, the consent of which is necessary for the approval of a Rehabilitation Plan.

Answer 22

Voting Creditor

Question 23

The power of the rehabilitation court to approve and implement a rehabilitation plan notwithstanding the objection of the majority of creditors. It is necessary to curb the majority creditors’ natural tendency to dictate their own terms and conditions to the rehabilitation, absent due regard to the greater long-term benefit of all stakeholders. It forces the creditors to accept the terms and conditions of the rehabilitation plan, preferring long-term viabilty over immediate but incomplete recovery

Answer 23

CRAM-DOWN

Question 24

A person appointed by the Court to oversee and monitor the operations of the debtor, ensure that the value of the debtor’s property is reasonably maintained during the pendency of the proceedings, and to implement the rehabilitation plan once aprroved.

Answer 24

Rehabilitation Receiver